Yesterday, A.M. Best and Moody's said they're not changing ratings or rating statuses for American International Group or its insurance operations, even though an $85 billion federal government credit facility eases holding company liquidity issues.

At Oldwick, N.J.-based A.M. Best, all ratings--including property-casualty insurer financial strength ratings that were dropped to "A" from "A-plus" on Monday--remain under review with negative implications.

Best analysts said they recognize that a two-year loan from the Federal Reserve removed the imminent threat of bankruptcy and that the outside perspective of a new chief executive--Edward Liddy--increases the potential for objective decisions about the future direction of AIG.

Still, "A.M. Best believes it is premature to declare financial stability to such an extent that a change in outlook or ratings is warranted," the firm said in a statement, adding that the issuer credit rating of the holding company is unchanged. (A.M. Best dropped that rating to "triple-b" from "a-plus" on Monday.)

Likewise, Moody's Investors Service said it will maintain its present ratings on AIG--senior unsecured debt at "A2," short-term debt at "Prime-1," on review for possible downgrade--and on AIG's insurance subsidiaries. When Moody's dropped the AIG debt ratings on Monday, it also dropped some life insurer financial strength ratings to "Aa3" from "Aa2," and put the "Aa3" p-c company ratings on review for possible downgrade.

"AIG's core insurance operations are fundamentally solid, in Moody's view, but are subject to substantial reputational risk as a result of the recent market turmoil," the New York-based rating agency said.

"AIG's management team is working vigorously to demonstrate that its insurance subsidiaries have sufficient liquidity and capital to support existing and new business," Moody's said, adding, however, that "it will take time to determine the extent to which recent events may have weakened the companies' standing in the market."

While making note of the substantial liquidity benefit provided to the holding company by the credit facility, Moody's said it believes "it would be difficult for AIG to access long-term capital at present, given the unsettled state of financial markets and uncertainty surrounding AIG's strategic plans."

Moody's ongoing review of the ratings on AIG and its subsidiaries will focus on AIG's evolving liquidity profile, the extent to which AIG borrows under the Fed facility, the execution of asset sales, and the performance of the businesses that AIG continues to own.

Moody's also will consider AIG's ability to contain and reduce risk in its mortgage- exposed investment and derivative portfolios, yesterday's statement said.

Moody's said its review of the insurance financial strength ratings of operating subsidiaries will focus on their operating performance during this period of stress as well as the potential for sale or spin-off. This review also will consider rating profiles of likely acquirers to the extent that businesses are identified for sale.

A.M. Best in its announcement said it "remains optimistic" for the insurance businesses based on its knowledge of the subsidiaries' sufficient capital levels, quality management and enviable franchise value. However, it said "the long-term corporate structure within which the remaining businesses will operate is not clear."

The rating firm also said its short-term concerns include potential for policyholder departures and surrenders and continued erosion of confidence from consumers, policyholders, counterparties, credit facility banks and employees.

In addition, A.M. Best said it needs to monitor potential erosion of franchise value to determine whether AIG has the ability to realize the true economic value of its franchises upon sale.

"With regard to a streamlined AIG, the financial flexibility, balance sheet strength, beneficial funding costs, and investor and creditor confidence previously sustaining AIG do not exist at this time," Best said.

On Wednesday, Fitch Ratings changed the status of its ratings--including AIG's long-term issuer default rating of "A" and the "double-A-minus" p-c insurer financial strength ratings--to "evolving" from "negative."

Soon after, Standard & Poor's changed the CreditWatch status of its AIG long-term credit ratings and "A-plus" insurer financial strength ratings to "developing" from "negative." S&P also raised its short-term counterparty ratings on AIG and AIG's International Lease Financing Corporation to "A-1" from "A-2."

The firm cancelled a conference call to discuss the ratings of AIG, Lehman, Merrill Lynch and Bank of America, which was scheduled to take place Thursday to "enable...analysts to continue to review developments in the marketplace."